S.D. Traders v. Commissioner of Income-tax And Anr
[Citation -2019-LL-0903-21]

Citation 2019-LL-0903-21
Appellant Name S.D. Traders
Respondent Name Commissioner of Income-tax And Anr
Court HIGH COURT OF ALLAHABAD
Relevant Act Income-tax
Date of Order 03/09/2019
Assessment Year 2006-07
Judgment View Judgment
Keyword Tags revisional jurisdiction • new source of income • barred by limitation • taxability of income • issuance of notice • labour expenses • escaped income • labour charges • tax liability • satisfaction • gross profit • time limit • job work • penalty • refund • rejection of books of accounts
Bot Summary: In Nirbheram Daluram's case, the decisions of Kanpur Coal Syndicate's case and Jute Corporation of India Ltd.'s case were also considered and it was observed by the Apex Court that the appellate 7 INCOME TAX APPEAL No. - 159 of 2016 powers conferred on the first appellate authority under section 251 were not confined to the matter, which had been considered by the ITO, as the first appellate authority is vested with all the wide powers of the Assessing Officer may have while making the assessment, but the issue whether these wide powers also include the power to discover a new source of income was not commented upon. Reliance has been placed upon the decision of the Apex Court in case of Commissioner of Income Tax vs. Nirbheram Deluram 1997 91 Taxman 181, CIT vs. Kanpur Coal Syndicate 1964 53 ITR 225 as well as Jute Corporation of India vs. CIT 1991 187 ITR 688, in which the Apex Court in depth considered the power of the Appellate Assistant Commissioner while exercising power under Section 251 of the Income Tax Act. Shri Mahajan has relied upon a decision of Apex Court in the case of CIT v. Nirbheram Daluram 1997 224 ITR 610 wherein the Apex Court has held that the Appellate Assistant Commissioner is entitled to direct additions in respect of items of income not considered by the Income Tax Officer. The first argument raised by the counsel for the assessee that the CIT while exercising power of enhancement under Section 251 of the Act cannot consider new source of income which was not dealt by the Assessing Officer, in the present case cannot be accepted as after the remand by this Court, the CIT as well as the Tribunal in depth had recorded a finding that there was no new source of income on which the additions had been made and it was all on the records produced before the Assessing Officer that the CIT had made additions of labour charges as well as addition of sundry 16 INCOME TAX APPEAL No. - 159 of 2016 creditors to the extent of Rs.15.00 lacs. The argument of the counsel for the assessee relying upon the decision of the Apex Court in case of Shapoorji Pallonji Mistry, Rai Bahadur Hardutroy Motilal Chamaria and Sardari Lal Co. cannot be accepted as the said judgments have their very basis where the Appellate Assistant Commissioner had made addition or deletion on the basis of new source of income, but present case is not of new source of income, as CIT has relied upon the books of accounts submitted by the assessee along with his return and had claimed expenditure made by him in profit and loss account and claim of sundry creditors shown in balance-sheet. The Apex Court while dealing with the power of the Appellate Assistant Commissioner under Section 251 of the Act had in case of Nirbheram Deluram and Jute Corporation of India had held that power of Appellate 17 INCOME TAX APPEAL No. - 159 of 2016 Assistant Commissioner is coterminous with that of Income Tax Officer and he can do what the Income Tax Officer can do and also direct him to do what he has failed to do. The case law relied upon by the assessee in case of Sardari Lal Co. and Shapoorji Pallonji Mistry are all distinguishable in the facts of the present case, and the Hon'ble Courts in those cases had only dealt with the situation wherein AAC found new source of income and made additions to the income, while in the present case no such addition was made from any new source of income but from the return so submitted by the assessee himself.


[1] INCOME TAX APPEAL No. - 159 of 2016 AFR Reserved on 21.08.2019 Delivered on 03.09.2019 Court No. - 35 Case :- INCOME TAX APPEAL No. - 159 of 2016 Appellant :- M/S S.D. Traders Respondent :- Commissioner Of Income Tax And Anr. Counsel for Appellant :- Suyash Agarwal Counsel for Respondent :- C.S.C. I.T.,Krishna Agarawal,Pravin Kumar Hon'ble Bharati Sapru,J. Hon'ble Rohit Ranjan Agarwal,J. (Delivered by Hon'ble Rohit Ranjan Agarwal,J.) 1. This is assessee's appeal under Section 260-A of Income Tax Act, 1961 (hereinafter called as 'Act') assailing order of Income Tax Appellate Tribunal, Lucknow Bench, 'A' Lucknow (hereinafter called as 'Tribunal') dated 24.02.2016, affirming order of CIT (A) as far as regarding addition out of sundry creditors to extent of Rs.15 lacs and disallowance of 25% of labour charges. appeal was admitted on 05.07.2016 on following question of law:- (i) Whether Appellate Tribunal was legally justified in holding that CIT(A) in exercise of power of enhancement u/s 251 has power to consider new source of income which was not dealt by A.O. in assessment order ignoring Full Bench decision of CIT vs. Sardari Lal & Co. 251 ITR 864 (Del) (FB)? (v) Whether Appellate Tribunal was justified in not considering that after set-aside proceedings by Hon'ble high Court, CIT(A) has not issued fresh notice of enhancement (although time barred) and followed its earlier order without application of mind? 2. However, vide order dated 02.05.2019, this Court allowed [2] INCOME TAX APPEAL No. - 159 of 2016 application filed by appellant for additional question of law proposed by him which are as under:- (iii) whether ITAT was correct to disallow Rs.5.95 lacs, being 25% of labour charges ignoring increasing trend in G.P rate of 17.79% in this year as compared to 13.79% in A.y 2005-06, specially when all expenses were vouched and verifiable being books of accounts are duly audited u/s 44AB of Act, in absence of its rejection and books have not been rejected. (iv) whether ITAT has rightly sustained addition of Rs.15 lacs out of Sundry Creditors for onus of discharge of verification after 7 years, on appellant while legal observation to preserve books of Accounts and other documents, for 6 years from relevant assessment years and third party is under no obligation to provide confirmation or verification beyond 6 years from relevant assessment years. 3. On 03.05.2019, above mentioned question of laws were incorporated by appellant in paper-book as question nos. III and IV. Assessee/ appellant is in business of civil contract, and for assessment year 2006-07 disclosed his job work receipts amounting to Rs.90,35,009/- and declared gross profit of Rs.16,07,474/- whereas net profit was shown as Rs.3,62,113/-. Return of income was filed on 31.10.2006 and same was processed under Section 143(1) of Act on 14.09.2007. Case of assessee was selected for scrutiny and notice under Section 143(2) was issued on 19.10.2007, as well as notice under Section 142(1) along with questionnaire was issued on 08.08.2008. According to assessee, he replied queries raised by Assessing Officer. AO completed assessment and made three additions. 4. order of assessment was challenged by assessee [3] INCOME TAX APPEAL No. - 159 of 2016 before Commissioner of Income Tax (Appeals), who on 13.09.2013 issued notice requiring appellant to produce labour register including bills, vouchers and ledger accounts as well as details of sundry creditors. On 14.11.2013, CIT (A) passed order enhancing income of appellant by Rs.26.50 lacs which includes disallowances to extent of 50% of wage expenses claimed by appellant in profit and loss account and 50% of sundry creditors appearing in balance sheet of assessee. 5. Order of CIT(A) was challenged before Tribunal by assessee, and on 14.04.2014, Tribunal dismissed appeal of assessee. Aggrieved by this order assessee preferred Income Tax Appeal Defective No. 145 of 2014 before this Court. On 10.12.2014, this Court set aside order of CIT (A) and of Tribunal, and restored proceedings for reconsideration before CIT (A), with direction that appellant shall file all required information and documentary material before CIT (A) by 31st December, 2014 and shall appear before CIT (A) for receiving directions as to hearing on 5 th January, 2015. It was further held that in case assessee fails to file required information and documentary material, CIT (A) would be at liberty to pass orders on basis of available records after furnishing opportunity of being heard to assessee. 6. In compliance of order of this Court, it appears that assessee filed application along with copy of order before CIT (A) along with certain documents which have been enclosed along with this appeal and are part of record as [4] INCOME TAX APPEAL No. - 159 of 2016 Annexure-6. Further, notice under Section 250 was issued by CIT (A) for hearing on 05.01.2015. Thereafter, appellant was given several opportunities on 31.12.2014, 18.02.2015, 27.02.2015, 09.03.2015, 17.03.2015 and 25.03.2015. From order of CIT (A), it appears that authorised representative of appellant appeared from time to time and furnished replies/ documents. On 31.03.2015, CIT (A) partly allowed appeal of assessee and disallowance of Rs.36,019/- and Rs.20,000/- were deleted, while additions of Rs.11.50 lacs and Rs.15.00 lacs were confirmed. Against this order appeal was filed by assessee/ appellant before Tribunal which was also partly allowed on 24.02.2016 confirming addition of amount of sundry creditors to extent of Rs.15.00 lacs, while disallowance on labour charges of Rs.5.95 lacs being made. It is against this order that present appeal has been filed by assessee. 7. Learned senior counsel appearing for assessee submitted that Assessing Officer had made three additions which were deleted by CIT (A) but had wrongly made addition of Rs.11.50 lacs and Rs.15.00 lacs towards labour expenditure and sundry creditors, as he did not had jurisdiction to introduce new source of income and assessment was to be confined to those items of income which was subject matter of original assessment, that is three additions made by AO of Rs.76,019/-, Rs.20,000/- and Rs.54,375/- only. 8. It was submitted that Section 251(1)(a) of Act only envisages for appellate authority that is CIT (Appeal) to [5] INCOME TAX APPEAL No. - 159 of 2016 confine its assessment to original assessment order and not to include power to discover new source of income. Reliance has been placed upon decision in case of CIT v. Shapoorji Pallonji Mistry [1962] 44 ITR 891 (SC). Relevant portion relied upon is extracted hereasunder:- In our opinion, this Court must be held not to have expressed its final opinion on point arising here, in view of what was stated at pages 709 and 710 of report. This Court, however, gave approval to opinion of learned Chief Justice of Bombay High Court that section 31 of Income-tax Act confers not only appellate powers upon Appellate Assistant Commissioner in so far as he is moved by assessee but also revisional jurisdiction to revise assessment with power to enhance assessment. So much, of course, follows from language of section itself. only question is whether in enhancing assessment for any year he can travel outside record that is to say, return made by assessee and assessment order passed by Income-tax Officer with view to finding out new sources of income not disclosed in either. It is contended by Commissioner of Income-tax that word "'assessment" here means ultimate amount which assessee must pay, regard being had to charging section and his total income. In this view, it is said that words "enhance assessments are not confined to assessment reached through particular process but amount which ought to have been computed if true total income had been found. There is no doubt that this view is also possible. On other hand, it must not be overlooked that there are other provisions like sections 34 and 33B, which enable escaped income from new sources to be brought to tax after following special procedure. assessee contends that powers of Appellate Assistant Commissioner extend to matters considered by Income-tax Officer, and if new source is to be considered, then power of remand should be exercised. By exercise of power to assess fresh sources of income, assessee is deprived of finding by two tribunals and one right of appeal. 9. Counsel for assessee also relied upon decision of [6] INCOME TAX APPEAL No. - 159 of 2016 Apex Court in case of ITO v. Rai Bahadur Hardutroy Motilal Chamaria [1967] 66 ITR 443 (SC) which had followed earlier decision of Apex Court cited above. Reliance has also been placed on decision of Supreme Court in case of Additional Commissioner of Income Tax v. M/s. Gurjargravures (P.) Ltd. [1978] 111 ITR 1 (SC), following earlier two decisions of Apex Court. Counsel for assessee vehemently argued that power of first appellate authority does not go beyond what has been considered by Assessing Officer in appeal and reliance upon decision of Full Bench in case of CIT v. Sardari Lal and Co. [2001] 251 ITR 864 (Delhi) has been placed wherein it has been held as under:- 7. learned counsel for revenue also submitted that this conclusion of Division Bench needs fresh look. We have considered this submission in background of what had been stated by Apex Court in Jute Corporation of India Ltd. v. CIT [1991] 187 ITR 688 and CIT v. Nirbheram Daluram [1997] 224 ITR 610. In Jute Corporation of India Ltd.'s case (supra), Apex Court while considering question whether AAC has jurisdiction to allow assessee to raise additional ground in assailing order of assessment before it, referred to Shapoorji Pallonji Mistry's case (supra), and draw distinction between power to enhance tax on discovery of new source of income and granting deduction on admitted facts supported by decision of Apex Court. Relying on certain observations made by Apex Court in CIT v. Kanpur Coal Syndicate [1964] 53 ITR 225, Apex Court held that powers of first appellate authority are coterminous with those of Assessing Officer and first appellate authority is vested with all wide powers, which subordinate authority may have in matter. In Nirbheram Daluram's case (supra), decisions of Kanpur Coal Syndicate's case (supra) and Jute Corporation of India Ltd.'s case (supra) were also considered and it was observed by Apex Court that appellate [7] INCOME TAX APPEAL No. - 159 of 2016 powers conferred on first appellate authority under section 251 were not confined to matter, which had been considered by ITO, as first appellate authority is vested with all wide powers of Assessing Officer may have while making assessment, but issue whether these wide powers also include power to discover new source of income was not commented upon. Consequently, view expressed in Shapoorji Pallonji Mistry's case (supra) and Rai Bahadur Hardutroy Motilal Chamaria's case (supra) still holds feet. It may be noted that issue was considered in CIT v. Mc. Millan and Co. [1958] 33 ITR 183 (SC). Referring to decision of Bombay High Court in Narrondas Manordass v. CIT [1957] 31 ITR 909, it was held that language used in section 31 is wide enough to enable first appellate authority to correct ITO not only with regard to matter which has been raised by assessee but also with regard to matter which has been considered by Assessing Officer and determined in course of assessment. It is also relevant to note that in Jute Corporation'of India Ltd.'s case (supra), Apex Court inter alia observed as follows:- " ..The AAC, on appeal preferred by assessee, had jurisdiction to invoke, for first time, provisions of rule 33 of Indian Income-tax Rules, 1922, for purpose of computing income of non-resident even if ITO had not done so in assessment proceedings. But, in Shapoorji Pallonji Mistri [1962] 44 ITR 891, this Court, while considering extent of power of AAC, referred to number of cases decided by various High Courts including Bombay High Court judgment in Narrondas Manordass [1957] 31 ITR 909 and also decision of this Court in McMillan and Co. [1958] 33 ITR 182 and held that, in appeal filed by assessee, AAC has no power to enhance assessment by discovering new sources of income not considered by ITO in order appealed against. It was urged on behalf of revenue that words 'enhance assessment' occurring, in section 31 were not confined to assessment reached through particular process but amount which ought to have been computed if true total income had been found. Court observed that there was no [8] INCOME TAX APPEAL No. - 159 of 2016 doubt that this view was also possible, but having regard to provisions of sections 34 and 33-B, which made provision for assessment of escaped income from new sources, interpretation suggested on behalf of revenue would be against view which had held field for nearly 37 years......" (p. 692) [Emphasis supplied] 8. Looking from aforesaid angles, inevitable conclusion is that whenever question of taxability of income from new source of income is concerned, which had not been considered by Assessing Officer, jurisdiction to deal with same in appropriate cases may be dealt with under sections 147/148 of Act and section 263, if requisite conditions are fulfilled. It is inconceivable that in presence of such specific provisions, similar power is available to first appellate authority. That being position, decision in CIT v. Union Tyres [1999] 240 ITR 556 of this Court expresses correct view and does not need re-consideration. This reference is accordingly disposed of. 10. Counsel for assessee also relied on decision of Kerala High Court in case of Commissioner of Income Tax, Thrissur v. B.P. Sherafudin [2017] 399 ITR 524 (Kerala). Lastly, he submitted that CIT (A) had issued notice for enhancement on 13.09.2013, while time limit expired on 31.03.2013 for assessment year 2006-07 and said proceedings are barred by limitation in view of Section 149(1) (b) of Act. 11. Refuting arguments made by counsel for assessee, Sri Krishna Agarwal, learned counsel appearing for Revenue submitted that question nos. (i) and (ii) are substantial question of law while question nos. (iii) and (iv) framed as additional questions are questions of fact. He submitted that power of enhancement provided under Section 251 of Act, is in fact, power of Appellate Assistant [9] INCOME TAX APPEAL No. - 159 of 2016 Commissioner coterminous with that of Income Tax Officer and he can do what Income Tax Officer do and also direct him to do what he has failed to do. It was further contended that CIT (A) had been empowered under Section 251 to enhance assessment and he may consider and decide any matter arising out of proceedings in which order appealed against was passed. Power of CIT(A) cannot be limited to any disallowances or additions made by Assessing Officer but it extends to whole of proceedings. 12. He further submitted that assessee filed its return of income along with balance-sheet, profit and loss account and audited books of account in assessment proceedings, in which he claimed deduction on account of labour expenses and sundry creditors. CIT (A) has power to look into such deductions claimed by assessee in his return as well as any credits in its books of account which assessee does not claim to be its income. 13. Reliance has been placed upon decision of Apex Court in case of Commissioner of Income Tax vs. Nirbheram Deluram [1997] 91 Taxman 181 (SC), CIT vs. Kanpur Coal Syndicate [1964] 53 ITR 225 (SC) as well as Jute Corporation of India vs. CIT [1991] 187 ITR 688 (SC), in which Apex Court in depth considered power of Appellate Assistant Commissioner while exercising power under Section 251 of Income Tax Act. Further, Apex Court in Jute Corporation of India (supra) distinguished judgment passed in case of Gurjargravures (P.) Ltd. (supra) and held as under:- [10] INCOME TAX APPEAL No. - 159 of 2016 4. Section 31 of Income-tax Act, 1922 ('the Act') also conferred power on AAC to hear appeal against assessment order made by ITO. Chagla, C. J. of Bombay High Court considered question in detail in Narrondas Manordass v. CIT, [1957] 31 ITR 909 and held that AAC was empowered to correct ITO not only with regard to matter which had been raised by assessee but also with regard to matter which may have been considered by ITO and determined in course of assessment. High Court observed that since AAC had been revising authority against decisions of ITO; revising authority not in narrow sense of revising those matters, which assessee makes grievance but subject-matter of appeal not only he had same powers which could be exercised by ITO. These observations were approved by this Court in CIT v. McMillan and Co., [1958] 33 ITR 182 AAC on appeal preferred by assessee had jurisdiction to invoke, for first time provisions of rule 33 of Income-tax Rules, 1922, for purpose of computing income of nonresident even if ITO had not done so in assessment proceedings. But in CIT v. Shapporji Pallonji Mistry, [1962] 44 ITR 891 this Court while considering extent of power of AAC referred to number of cases decided by various High Courts including Bombay High Court judgment in Narrondas Manordass's case (supra) and also decision of this Court in McMillan and Co.'s case (supra) and held that in appeal filed by assessee, AAC has no power to enhance assessment by discovering new sources of income, not considered by ITO in order appealed against. It was urged on behalf of revenue that words 'enhance assessment' occurring in section 31 were not confined to assessment reached through particular process but amount which ought to have been computed if true total income had been found. Court observed that there was no doubt that this view was also possible, but having regard to provisions of sections 34 and 33B of 1922 Act, which made provisions for assessment of escaped income from new sources, interpretation suggested on behalf of revenue would be against view which had held field for nearly 37 years. In this view Court held that AAC had no power to enhance assessment by discovering new sources of income. This decision does not directly deal with question which we are concerned. Power to enhance [11] INCOME TAX APPEAL No. - 159 of 2016 tax on discovery of new source of income is quite different than granting deduction on admitted facts fully supported by decision of this Court. If tax liability of assessee is admitted and if ITO is afforded opportunity of hearing by appellate authority in allowing assessee's claim for deduction on settled view of law, there appears to be no good reason to curtail powers of appellate authority' under section 251(1)(a) of Act. 6. In Gurjargravures (P.) Ltd.'s case (supra) this Court has taken different view, holding that in absence of any claim made by assessee before ITO regarding relief, he is not entitled to raise question of exemption under Section 84 of Act before AAC hearing appeal against order of ITO. In that case assessee had made no claim before ITO for exemption under Section 84, no such claim was made in return nor any material was placed on record supporting such claim before ITO at time of assessment. assessee for first time made claim for exemption under Section 84 before AAC who rejected claim but on further appeal Tribunal held that since entire assessment was open before AAC there was no reason for his not entertaining claim, or directing ITO to allow appropriate relief. On reference High Court upheld that view taken by Tribunal. On appeal this Court set aside order of High Court as it was of view that AAC had no power to interfere with order of assessment made by ITO on new ground not raised before ITO, and, therefore, Tribunal committed error in directing AAC to allow claim of assessee under Section 84. Apparently this view taken by two Judge Bench of this Court appears to be in conflict with view taken by three Judge Bench of Court in Kanpur Coal Syndicate's case (supra). It appears from report or of decision in Gujrat High Court case three Judge Bench decision in Kanpur Coal Syndicate's case (supra) was not brought to notice of Bench in Gurjargravures (P.) Ltd.'s case (supra). In circumstances view of larger Bench in Kanpur Coal Syndicate's case (supra) hold field. However, we do not consider it necessary to over-rule view taken in Gurjargravures (P.) Ltd.'s case (supra) as in our opinion that decision is founded on special facts of case, as would appear from following observations made by Court:- [12] INCOME TAX APPEAL No. - 159 of 2016 ...As we have pointed out earlier, statement of case drawn up by Tribunal does not mention that there was any material on record to sustain claim for exemption which was made for first time before AAC. We are not here called upon to consider case where assessee failed to make claim though there was no evidence on record to support it, or case where claim was made but no evidence or insufficient evidence was adduced in support. In present case, neither any claim was made before Income-tax Officer, nor was there any material on record supporting such claim... (p.5) above observations do not rule out case for raising additional ground before AAC if ground so raised could not have been raised at that particular stage when return was filed or when assessment order was made or that ground became available on account of change of circumstances or law. There may be several factors justifying raising of such new plea in appeal, and each case has to be considered on its own facts. If AAC is satisfied he would be acting within his jurisdiction in considering question so raised in all its aspects. Of course, while permitting assessee to raise additional ground, AAC should exercise his discretion in accordance with law and reason. He must be satisfied that ground raised was bona fide and that same could not have been raised for good reasons. satisfaction of AAC depends upon facts and circumstances of each case and no rigid principles or any hard and fast rule can be laid down for this purpose. 14. division Bench of this Court in case of Commissioner of Income Tax v. Kashi Nath Candiwala [2005] 144 Taxman 840 (All.) relying upon judgment of Nirbheram Deluram (supra) and Jute Corporation of India (supra) held that in view of Explanation to Section 251 of Act appellate authority is empowered to consider and decide any matter arising out of proceedings in which order appealed against was passed. [13] INCOME TAX APPEAL No. - 159 of 2016 7. We have heard Sri A.N. Mahajan, learned standing counsel for revenue and nobody has appeared on behalf of respondent-assessee. learned counsel for Revenue submitted that under Explanation to section 251 of Act, Appellate Authority is empowered to consider and decide any matter arising out of proceedings in which order appealed against was passed notwithstanding fact that such matter was not raised before him by appellant and therefore, even though trading results were not subject-matter of appeal before Commissioner of Income Tax (Appeals), he was justified in going into trading results and substituting it by his own findings. Shri Mahajan has relied upon decision of Apex Court in case of CIT v. Nirbheram Daluram [1997] 224 ITR 610 wherein Apex Court has held that Appellate Assistant Commissioner is entitled to direct additions in respect of items of income not considered by Income Tax Officer. Apex Court has followed its earlier decision in case of Jute Corpn. of India Ltd. v. CIT [1991] 187 ITR 688 and has held that power of Appellate Assistant Commissioner is coterminous with that of Income Tax Officer and he can do what Income Tax Officer can do and also direct him to do what he has failed to do. 15. Further two decisions relied upon by counsel for Revenue are in case of CIT v. K.S. Dattatreya [2011] 197 Taxman 151 (Kar.) and CIT v. McMillan & Co. [1958] 33 ITR 182 (SC). 16. Sri Agarwal submitted that reliance placed on decision of Shapoorji Pallonji Mistry (supra) and Rai Bahadur Hardutroy Motilal Chamaria (supra) are completely distinguishable on facts, as in both cases Court held that AAC could not travel outside record that is to say return made by assessee with view to finding out new source of income not disclosed. 17. Lastly counsel for Revenue submitted that there [14] INCOME TAX APPEAL No. - 159 of 2016 was no requirement of issuance of fresh notice of enhancement once this Court restored matter back to CIT (A) to consider material, giving opportunity to assessee and fixing 31st December, 2014 as last date for submission of documents/ material and several opportunities being provided by first appellate authority thus, question of fresh issuance of notice does not arise. 18. We have heard Sri Rakesh Ranjan Agarwal, learned Senior Advocate assisted by Sri Suyash Agarwal, learned counsel for assessee and Sri Krishna Agarwal, learned cousel for Revenue. 19. Before proceeding, glance of provisions of Section 251 of Act is necessary, which is extracted hereasunder:- 251. (1) In disposing of appeal, Commissioner (Appeals) shall have following powers (a) in appeal against order of assessment, he may confirm, reduce, enhance or annul assessment; (aa) in appeal against order of assessment in respect of which proceeding before Settlement Commission abates under section 245HA, he may, after taking into consideration all material and other information produced by assessee before, or results of inquiry held or evidence recorded by, Settlement Commission, in course of proceeding before it and such other material as may be brought on his record, confirm, reduce, enhance or annul assessment; (b) in appeal against order imposing penalty, he may confirm or cancel such order or vary it so as either to enhance or to reduce penalty; (c) in any other case, he may pass such orders in appeal as he thinks fit. [15] INCOME TAX APPEAL No. - 159 of 2016 (2) Commissioner (Appeals) shall not enhance assessment or penalty or reduce amount of refund unless appellant has had reasonable opportunity of showing cause against such enhancement or reduction. Explanation. In disposing of appeal, Commissioner (Appeals) may consider and decide any matter arising out of proceedings in which order appealed against was passed, notwithstanding that such matter was not raised before Commissioner (Appeals) by appellant. 20. careful reading of Section 251 reveals that power vest in Commissioner (Appeals), in appeal against assessment order, where he can confirm, reduce enhance or annul assessment. Explanation to Section 251 further clarifies position and empowers Commissioner (Appeals) to consider and decide any matter arising out of proceedings in which order appealed against was passed, notwithstanding that said matter was not raised before him by appellant, meaning thereby that power exercisable by CIT (Appeal) under Section 251 cannot be restricted to only issues raised by appellant in any appeal before him, but Commissioner can exercise his discretion in accordance with law. 21. first argument raised by counsel for assessee that CIT (A) while exercising power of enhancement under Section 251 of Act cannot consider new source of income which was not dealt by Assessing Officer, in present case cannot be accepted as after remand by this Court, CIT (A) as well as Tribunal in depth had recorded finding that there was no new source of income on which additions had been made and it was all on records produced before Assessing Officer that CIT (A) had made additions of labour charges as well as addition of sundry [16] INCOME TAX APPEAL No. - 159 of 2016 creditors to extent of Rs.15.00 lacs. 22. It has been argued by counsel for Revenue that CIT (A) has not travelled beyond books of accounts and during appeal it was found that only confirmation was available of five parties and rest of creditors were untraceable, hence addition of amount was made which were part of books of account. Likewise, addition made as far as labour charges are concerned was also on basis of books of account submitted by assessee as such, it cannot be accepted that CIT (A) had made additions on basis of new source of income. 23. argument of counsel for assessee relying upon decision of Apex Court in case of Shapoorji Pallonji Mistry (supra), Rai Bahadur Hardutroy Motilal Chamaria (supra) and Sardari Lal & Co. (supra) cannot be accepted as said judgments have their very basis where Appellate Assistant Commissioner had made addition or deletion on basis of new source of income, but present case is not of new source of income, as CIT (A) has relied upon books of accounts submitted by assessee along with his return and had claimed expenditure made by him in profit and loss account and claim of sundry creditors shown in balance-sheet. 24. Apex Court while dealing with power of Appellate Assistant Commissioner under Section 251 of Act had in case of Nirbheram Deluram (supra) and Jute Corporation of India (supra) had held that power of Appellate [17] INCOME TAX APPEAL No. - 159 of 2016 Assistant Commissioner is coterminous with that of Income Tax Officer and he can do what Income Tax Officer can do and also direct him to do what he has failed to do. 25. In present case, CIT (A) had deleted addition made by Assessing Officer and had made two additions of labour charges and sundry creditors on basis of profit and loss account, and balance-sheet filed by assessee along with his return. Thus, there was no new source of income as claimed by assessee. case law relied upon by assessee in case of Sardari Lal & Co. (supra) and Shapoorji Pallonji Mistry (supra) are all distinguishable in facts of present case, and Hon'ble Courts in those cases had only dealt with situation wherein AAC found new source of income and made additions to income, while in present case no such addition was made from any new source of income but from return so submitted by assessee himself. 26. second question as regards issuance of fresh notice of enhancement by CIT (A) is concerned has no relevance, once order of Tribunal as well as CIT (A) was set aside by this Court on 10.12.2014 restoring appeal back to CIT (A) for reconsideration and fixing 31 th December, 2014 as last date for appellant to file all required information and documentary material and to appear before CIT (A) on 05th January, 2015. question of law raised by assessee is of no consequence as he, thereafter, had filed documents before CIT (A) and had appeared, thus, question of issuance of fresh notice for enhancement does not [18] INCOME TAX APPEAL No. - 159 of 2016 arise and CIT(A) rightly decided question so raised before it. 27. As far as question no. (III) and (IV), which appellant had incorporated in his appeal with permission of Court are not substantial question of law and are questions of fact which have been dealt with by, both CIT (A) and Tribunal in depth and have categorically recorded finding of fact, for which no interference is required in this appeal. 28. Thus, argument of counsel for assessee cannot be accepted so as to restrict power of Commissioner (Appeals) on ground of new source of income, as Section 251 clearly envisages power of appellate authority for considering and deciding any material arising out of proceedings in which order appealed against was passed. In present case, all materials looked upon by appellate authority was before assessing authority, as such Commissioner (Appeals) rightly proceeded to decide same as it arose out of proceedings of assessment. 29. Apex Court has also affirmed that power of Commissioner (Appeals) cannot be restricted and in case of Jute Corporation of India Ltd. (supra) held that power of Commissioner (Appeals) being coterminous with that of Income Tax Officer, he can do what Income Tax Officer do and further section also empowers him to direct Assessing Officer to do what he had failed to do. power of Commissioner is not bridled in any way and language of section is plain and simple. [19] INCOME TAX APPEAL No. - 159 of 2016 30. Having considered material on record and law laid down by Apex Court in regard to power of Commissioner (Appeals) exercisable under Section 251 of Act, we are of considered opinion that order of Tribunal needs no interference and appeal of assessee is dismissed. 31. questions of law are, therefore, answered in favour of Revenue and against Assessee. Order Date :- 03.09.2019 V.S.Singh S.D. Traders v. Commissioner of Income-tax And Anr
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